How should firms that are looking to grow approach the application form?

If a firm is over £1m brokerage, it will have to supply more information, including a business plan and acquisition strategy. Smaller firms will fill in the form (HSF1) as accurately as they can, but will need to bear in mind that if their circumstances change, they will need to let us know and send us supplementary information.

Will permissions be granted early to those who apply early?

The FSA will issue a 'minded to authorise letter' as soon as it has made the decision. Firms will get formal notice in December 2004. If firms apply early they can expect to receive a 'minded to authorise' letter substantially before Jan 2005. If firms get this letter they can presume they will be authorised, but they will have an ongoing obligation to state if anything changes.

How will the issue of stationery be handled?

It is very important that firms do not imply to customers that they are authorised before Jan 2005. The issue was raised by a number of people in response to CP187. It is also important that people do not have stationery saying 'regulated by GISC'. We are looking at what measures can be taken to ease the transition. The idea of having a period of grace is part of the detail that needs to be considered.

Is the cost of compliance too great and will it put small firms out of business?

We estimate the cost of conduct of business rules to be £2.80 per policy per year. These costs are acceptable and proportionate. It is important for brokers to keep costs in perspective. There are pressures on small brokers and we are not oblivious to the needs of these firms. I feel we have done a lot to minimise the effect on them, but realise that some firms will want to alter their businesses in response to regulation.